First, Japan was clever and forcibly discharged nuclear wastewater, and as a result, other countries were fine, but Japan's own Hokkaido fishing grounds were polluted by nuclear wastewater, and a large number of dead fish poured onto the beaches, and at the same time, a large number of citizens were inexplicably poisoned. Moreover, in order to curry favor with the US "father," Japan did not hesitate to offend its next-door neighbor, but as a result, the United States did not reap the benefits, but was stabbed by the neighbor with a backhand call: "The Ryukyu Islands, sovereignty is undecided"! And what worries Japan the most is the fatal blow from the American father!
Recently, as the Federal Reserve announced that it would end its interest rate hikes, the "financial" butcher's knife held high by the Americans has made Japan more and more desperate! Because looking at the whole world, it seems that Japan is the only country that has been directly targeted by the US butcher's knife! So here we will first sort out why only Japan is the only country left, but it has been harvested?
There are not many economies in the world that can satisfy the appetite of the United States, and the few – China, Russia, Europe, and Japan – can satisfy the appetite of the United States.
According to the rhythm of interest rate hikes in the United States in the past: as the United States continued to raise interest rates, a large amount of dollars flowed back to the United States into the United States into the United States stock market, banks, Treasury bonds and other financial assets, and then a large number of developing countries broke out economic crises, enterprises collapsed, and asset prices plummeted;
However, this tried-and-true strategy failed in the big eastern countries that the United States wanted to harvest the most, and the big eastern powers could not be cut at all. From 2015 to the present, the United States can be said to have suffered repeated defeats, although it has also caused a lot of impact on the eastern powers, but the United States itself has not caught any good food.
Take a few recent examples: not long ago, American capitalists forcibly lowered the sovereign credit rating of a large eastern country, and at the same time lowered the credit rating of a series of enterprises in a large eastern country, and finally directly exposed a VAM agreement called Vanke Real Estate, in an attempt to burst the real estate bubble of a large eastern country, but in the end there was nothing, and the waves set off were so small that many people did not know that there was such a thing!
Since the big countries in the East have not found a flaw, the United States has set its sights on Russia. It's just that the Americans didn't expect that they would do everything they could, but Russia managed to survive! And the fundamental reason for the Americans' failure to harvest Russia was the beginning of the "new crown epidemic."
At the peak of the new crown epidemic in 2019, global trade shrank sharply due to the epidemic, and the demand for dollars in countries around the world shrank sharply, resulting in the natural return of tens of trillions of dollars to the United States. At the same time, the new crown epidemic in the United States is out of control, resulting in the US stock market triggering four circuit breakers in just half a month in early March 2020 (which is also jokingly called: US stocks fall limit), and this also makes a large number of US dollars that naturally return from overseas dare not go to US stocks.
Although the Federal Reserve began to raise interest rates on March 16, 2020, the U.S. interest rate level at this time was still at a historically low level, and a large number of U.S. dollars were reluctant to go to interest-rate financial products represented by U.S. Treasury bonds, which made a large number of natural repatriation dollars entrenched in various domestic commodity transactions in the United States, thereby indirectly pushing up U.S. inflation, and by the end of 2021, U.S. inflation once climbed to more than 7%, thus causing a sharp deterioration in the country's economic fundamentals.
After the outbreak of the Russian-Ukrainian conflict in early 2022, the United States publicly claimed that the FBI had discovered that Russia was going to take military action against Ukraine, but instead of stopping it, the United States continued to fan the flames, and even once threatened to prolong the Russian-Ukrainian conflict. It's just that Russia, with the covert help of the eastern powers, managed to hold out.
Russia succeeded, and in turn the United States and Europe fell into passivity. As a result, the United States and Europe began to operate in various ways. First, it openly confiscated Russia's foreign exchange reserves in the United States and Europe, and then kicked Russia out of the international settlement system...... This has led to a sharp decline in the world's trust in the U.S.-led financial settlement system.
However, in view of the hegemony of the dollar, although central banks did not immediately abandon the dollar, they are actively and consciously de-dollarizing some core assets and reducing their dependence on the dollar, but they are also quietly carrying out. And this explains why, from 2022 to early 2023, at the peak of US interest rate hikes, except for an insignificant economic crisis in Sri Lanka, no major economies have unexpectedly erupted due to the wave of US dollar interest rate hikes!
Seeing that the pit Russia was far less than expected, the Americans took advantage of the chaos to stab Europe. The United States deliberately amplified the conflict between Russia and Ukraine, stirred up a miasma in Europe, and pushed European natural gas prices to soar, and the United States took the opportunity to make a big profit. At the same time, the assets of some European countries have fallen sharply, and the United States has taken the opportunity to harvest many high-quality European assets.
It's just that although Europe's strength is not as good as it was back then, its family foundation is still thick, and it has not hurt the vital point, only a little blood. It's just that in this way, Europe is on guard, and it is difficult for the United States to continue to act. Moreover, the two sides are still allies on the surface, and if they push Europe too hard and directly force China and Russia to fall, then they will be able to get away with it, and all Americans can only stop in moderation.
As the U.S. dollar continues to raise interest rates, a large number of dollars flow back to the United States, coupled with the natural return of the U.S. dollar during the 19 new crown epidemic, began to make waves in the U.S. financial market. The crisis at the beginning of the 19-year new crown epidemic and the U.S. inflation crisis in 2021 have dealt a serious blow to the fundamentals of the U.S. economy, making the return of dollars reluctant to go to U.S. stocks, and even continue to flow out of U.S. stocks;
In the face of massive dollar inflows, US banks had to pay an extremely large amount of interest. If the interest of the previous US banks was naturally not a problem, but in the first two years of the impact of the new crown epidemic, the US banking industry could not support such a huge interest, so a large number of US banks were unable to cover their incomes and expenditures, and finally went bankrupt one after another, and at the most dangerous time, Wells Fargo, the fourth largest bank in the United States, almost went bankrupt.
Seeing that the hole in the U.S. banking industry is getting bigger and bigger, so that the U.S. can only exit the interest rate hike cycle, start a new round of easing, and find new targets, so Japan, the good son of the American capitalists we mentioned at the beginning, has entered the field of vision of the Americans. This also explains why the Bank of Japan urgently announced not long ago that it would withdraw from its long-standing negative interest rate policy, because Japan is really scared!
Why does Japan need to cut interest rates to release the dollar, instead of raising interest rates like other countries? This has to start with a strange long-term operation of the Bank of Japan -- the benchmark interest rate of the Bank of Japan is -0.1% (yes, you read that right, it is a negative 0.1%)! This means that I deposit 100 yuan in the bank, and when it expires, I will only take out 99.9 yuan! On the other hand, if we borrow 100 yuan from the bank, we will only have to repay 99.9 yuan at that time! (This is just an example, the Bank of Japan is negative, it does not mean that the average commercial bank is negative, but the Bank of Japan's negative interest rate will make the interest rate of the average Japanese bank incredibly low, such as 0.002%)!
The Bank of Japan's policy was originally intended to encourage consumption and stimulate investment by companies, but since the yen is an international currency, such a policy has another effect.
Due to the negative interest rate of the yen, no other country has lower interest rates than the yen. In this way, international investors can make a profit by simply obtaining yen from the Bank of Japan and investing in other freely convertible currencies. For example, in the simplest way, you can get a loan to get a very low interest rate in yen, then sell the yen, buy dollars, deposit them in a U.S. bank, and make a profit as long as the interest rate on the dollar is higher than the yen. (Although it sounds simple, there is still a threshold, and only big money can be played, so we ordinary people don't have to think nonsense.) Since this process requires the sale of yen, it will lead to a depreciation of the yen, which in turn will stimulate the Japanese economy as an export-oriented economy. This is also the reason why the Bank of Japan is willing to keep negative interest rates for a long time.
But this year there has been a very peculiar situation - the excessive depreciation of the yen. As the dollar raised interest rates to a high of 5.75%, there was an overselling of the yen, which led to excessive depreciation of the yen, and the Bank of Japan also took the lead to pull the yen up. This shows how huge this operation is to sell yen and buy dollars.
This raises another problem – the abnormal rise in inflation in Japan.
Since the 90s of the last century, Japan's economic bubble burst, Japanese society has fallen into a long-term low desire, domestic consumption is extremely sluggish and has been facing deflation for a long time, but in the first half of this year, there was no resurgence in the Japanese economy, and Japan's inflation has risen incredibly. The reason behind this is that the above-mentioned operation of "buying yen and selling dollars" has attracted a large number of foreign investors to come to Japan, and instead of exchanging yen for dollars to invest overseas, as in the past, they have stayed in Japan to speculate on various commodity transactions in Japan, thereby pushing up Japan's inflation, and Japan's troubles began with the abnormal rise in Japan's inflation.
You must know that Japan, as the third and fourth largest economy in the world all year round, has a large domestic market size, and it can leverage the inflation of such a large economy as Japan, which shows how scary the scale of international travel capital pouring into Japan is!
On the other hand, if the US dollar interest rate can remain high for a long time, then Japan's operation of maintaining negative interest rates is very beneficial, but Japan's long-term operation of completely binding the yen and the dollar has a very fatal loophole - the dollar began to cut interest rates!
Let's imagine what happens in the future when the dollar officially starts cutting interest rates:
As the US dollar began to cut interest rates, a large number of US dollars left the United States and flocked to the world: the general developing countries are limited in size and cannot accept many US dollars; the capital control of the big eastern countries has limited the scale of capital inflow; Europe has its own euro; and since Russia was kicked out of the US dollar settlement system, the United States has repeatedly invited it to return to the US dollar settlement system, but Russia has rejected it, so that the yen, as a freely convertible international currency, has almost become the only reservoir of massive US dollars!
If the US dollar and the euro start cutting interest rates in an all-round way, what will Japan's inflation look like with the influx of massive funds? How much will the yen appreciate? Everyone speculates.
The best option for the Bank of Japan is to suppress the yen, but how?
1. Cut interest rates - the interest rate is already negative, and further reduction will only further reduce the speculative cost of international travel capital, which is tantamount to encouraging international travel capital to continue to harvest Japan!
2. Recovering the Yen in the Foreign Exchange Market -- If at other times, the scale of the inflow of foreign capital into Japan is not too exaggerated, and it can be completely coped with with Japan's strength, but how frightening is the scale of international foreign capital at the moment? The Bank of Japan knows best whether Japan's existing foreign exchange reserves are enough or not! The answer is obvious, and the probability is that it is not enough. Otherwise, the Bank of Japan would not have announced in a hurry as soon as it learned that the Federal Reserve had decided to withdraw from interest rate hikes - Japan was ready to withdraw from negative interest rates!
When the yen eventually can't hold back, and the yen exchange rate, Japanese inflation, and Japanese asset prices continue to rise, Japan has only one way to go - raise interest rates!
However, once Japan begins to raise interest rates, the interest rate differential between the yen and the dollar narrows, on the one hand, the above-mentioned "sell yen, buy dollar" operation income decreases, a large amount of capital profits will exit the reverse "buy yen, sell dollar", which will cause the yen to appreciate, the appreciation of the yen superimposed on the yen interest rate, and will attract more international capital to speculate in Japan, thereby stimulating the Japanese stock market and various assets in Japan to soar, and this will promote the Japanese economy to bubble again.
Will the bubble Japanese economy burst?
You must know that the United States has long been annoyed and angry because it has failed to harvest the big countries in the East many times, and recently it has begun to play tricks again, continuing to arm Taiwan, and is plotting to turn the island of Taiwan into the next Ukraine...... In recent years, Japan has been "jumping up and down" on the Taiwan issue, making a stumbling block for the big countries in the East...... Coincidentally, the big eastern country is Japan's largest trading partner. On the Taiwan issue, Japan is very likely to make trouble, and such a big country in the East will inevitably cause problems in Japan's foreign trade. As the world's most typical export-oriented economy, Japan's economy is bound to suffer a major blow due to foreign trade problems, so there is no reason why Japan's economic bubble will not burst!
Even if the Taiwan issue is not taken into account, Japan's interest rate hike will inevitably lead to an appreciation of the yen, and this will also inhibit Japan's exports, weaken Japan's economy, and burst Japan's economic bubble over time! Isn't this a repetition of the old path of "bursting Japan's economic bubble" and "losing 30 years" after the 1989 "Plaza Accord"?
The only way for Japan to avoid this situation is for the dollar not to cut interest rates sharply! But as everyone knows, the United States will not keep interest rates high for a long time for Japan's sake. And how many times has the United States harvested the world over the years, and when has it ever shown mercy?
Of course, Japan is not without a way to survive, if Japan can withstand the pressure of the United States and actively reconcile with the big eastern powers: First, it will completely withdraw from Taiwan and support and even help the reunification of the big eastern powers; second, it will give up the Ryukyu Islands and return them to the big eastern powers; and third, if Japan can make big concessions on historical issues and let the emperor go to Nanjing to apologize; in exchange for the big powers in the east helping Japan through the crisis.
But is Japan willing to do this? I think most likely it is, after all, if Japan had been willing, it would have done it as early as 2008, so that Japan would not have the so-called "lost 30 years"!
Of course, the United States has not officially begun to cut interest rates at present, these are just some "unreliable" predictions, as for the United States to really start cutting interest rates in the future, we will wait and see what kind of bloody rain Japan will face!
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